Property Management
An Illinois property manager is holding tenant security deposits. Where must these funds be kept?
AIn the property manager's personal bank account
BIn the brokerage's operating account
CIn a separate trust (escrow) account, kept separate from operating funds✓ Correct
DIn an interest-bearing CD at any bank
Explanation
Under Illinois law, security deposits and other client funds must be kept in a separate trust account, strictly segregated from the property manager's own funds or the brokerage's operating funds. Commingling client funds with personal or business funds is a serious violation that can result in license suspension or revocation.
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Key Terms to Know
Escrow
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Math Concepts
State-Specific Concepts
Trust Account Rules
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